57 questions. Try each one, then open the answer to check yourself and read the explanation.
When the government gives up its ownership and control of a business to individuals, this is known as
Answer: C (privatization.)
Transferring government businesses to private owners is privatisation.
The reward received by a party in a contract agreement is known as
Answer: A (consideration.)
Consideration is what each party gets in return for his promise.
Payment to a ship owner for carrying one's cargo is
Answer: D (freight.)
Freight is the charge for carrying goods by ship.
Which of the following is not pre-sale service?
Answer: A (Repair and maintenance work)
Repair and maintenance are given after the sale (after-sales service).
The cooperative society that performs a combination of the functions of other types of cooperatives is called
Answer: B (multipurpose cooperative.)
A multipurpose co-operative combines several functions, e.g. buying, selling and lending.
That portion of the share capital which the company has asked the shareholders to pay for is known as
Answer: D (called-up capital.)
Called-up capital is the amount the company has asked shareholders to pay.
One of the advantages of air transport over other forms of transport is
Answer: D (speed.)
Air transport is the fastest means of transport.
Which of the following are elements of a valid contract?
Answer: B (Offer and acceptance)
Offer and acceptance are basic elements of a valid contract.
The last link in the channel of distribution is the
Answer: B (consumer.)
The consumer is the final link in the chain of distribution.
Taxes on imported foreign goods are also known as
Answer: B (tariffs.)
Taxes on imports are called tariffs.
If Karamo who lives in The Gambia imports goods from Senegal and later sells them in Guinea Bissau, Karamo is engaged in
Answer: D (entrepôt trade.)
Importing goods to re-export them is entrepôt trade.
Manufacturers may sell goods directly to consumers where goods are
I. made to customers' specification
II. advertised by the manufacturer.
III. perishable.
IV. highly technical.
V. widely demanded.
Answer: A (I, III and IV only)
Goods made to order, perishable goods and highly technical goods are best sold direct; widely demanded goods usually go through middlemen.
Which of the following is a means of payment?
Answer: B (Postal order)
A postal order is bought at the post office and used to make payments.
Shipping services rendered by Nigeria to The Gambia would be classified by The Gambia as
Answer: A (invisible imports.)
The Gambia pays for a service from abroad, so it is an invisible import for The Gambia.
The main divisions of production are
Answer: C (industry, commerce and direct services.)
Production is divided into industry, commerce and direct services; extraction, manufacturing and construction are divisions of industry only.
Use the following information: A trader's turnover was D36,000. Purchases was D28,000. The opening stock was D2,000 and the closing stock D3,000.
What is the cost of goods sold?
Answer: B (D27,000)
Cost of goods sold = 2,000 + 28,000 − 3,000 = D27,000.
Use the following information: A trader's turnover was D36,000. Purchases was D28,000. The opening stock was D2,000 and the closing stock D3,000.
The average stock is
Answer: C (D2,500)
Average stock = (2,000 + 3,000) ÷ 2 = D2,500.
Use the following information: A trader's turnover was D36,000. Purchases was D28,000. The opening stock was D2,000 and the closing stock D3,000.
What is the rate of turnover?
Answer: B (10.8 times)
Rate of turnover = 27,000 ÷ 2,500 = 10.8 times.
In marine insurance when a particular cargo is thrown into the sea in order to prevent the ship from sinking, the type of marine loss is
Answer: B (general average loss.)
Cargo sacrificed to save the ship is a general average loss, shared by all parties to the voyage.
The turnover of a trade is the
Answer: B (total sales made during a period.)
Turnover is the total value of sales in a period.
The total assets of a business less its total liability is known as
Answer: A (capital owned)
Assets minus liabilities equals the owner's capital (capital owned).
A document issued to the public by a company to advertise its share is known as
Answer: A (prospectus.)
A prospectus invites the public to buy a company's shares.
An overdraft is the
Answer: A (amount permitted to be withdrawn in excess of one's deposit.)
An overdraft lets a current account holder draw more than his balance.
Which of the following is not a principle of insurance?
Answer: C (Surrender value)
Surrender value is a term in life assurance, not a principle of insurance.
The par value of a share is also known as its
Answer: D (nominal price.)
Par value is the nominal (face) value of a share.
A cheque dated 15th March, 2012 will become stale on
Answer: D (16th September, 2012.)
A cheque is valid for six months, up to 15th September 2012, so it is stale from 16th September 2012.
Banks settle their indebtedness in the
Answer: D (clearing house.)
Banks settle what they owe one another at the clearing house.
Which of the following distinguishes home trade from foreign trade?
Answer: A (Payments are easily arranged)
In home trade one currency is used, so payment is easy; foreign trade needs foreign exchange.
Before the advent of legal tender and credit instrument, which of the following was used as a medium of exchange?
Answer: B (Cowries)
Cowries were used as money before modern currency.
When C.I.F. is quoted on an invoice, it means that the price includes the
Answer: D (cost, insurance and carriage.)
CIF means cost, insurance and freight (carriage).
Encouraging a high quality of members' products through the circulation of research information is a function of
Answer: A (Manufacturers Association.)
A manufacturers' association shares research information to raise its members' standards.
A voluntary association of business executives within a locality is known as
Answer: C (Chamber of Commerce.)
A chamber of commerce brings together businesspeople in a locality.
Which of the following is not a function of the Ports Authority?
Answer: C (Providing enough ships for the country)
Ports authorities run the ports; providing ships is the work of shipping lines.
Using symbols, letters, name or combination of these by a company to distinguish its products is
Answer: C (trade mark.)
A trade mark is a symbol, name or design that identifies a firm's products.
Trade as a division of commerce is usually classified into
Answer: C (home and foreign.)
Trade is divided into home trade and foreign trade.
Use the diagram (Production divided into X, Commerce and Direct Services; Commerce divided into Y and U; Y divided into Banking & Finance, Z, Insurance, Advertising, Transport and Communication) to answer the question. The box marked 'X' stands for
Answer: B (Industry.)
Production is divided into industry, commerce and direct services, so X is industry.
Use the diagram (Production divided into X, Commerce and Direct Services; Commerce divided into Y and U; Y divided into Banking & Finance, Z, Insurance, Advertising, Transport and Communication) to answer the question. The box marked 'Y' stands for
Answer: C (Aids to trade.)
Banking, insurance, advertising, transport and communication are aids to trade, so Y is aids to trade.
Use the diagram (Production divided into X, Commerce and Direct Services; Commerce divided into Y and U; Y divided into Banking & Finance, Z, Insurance, Advertising, Transport and Communication) to answer the question. The box marked 'Z' stands for
Answer: A (Warehousing.)
The missing aid to trade among banking, insurance, advertising, transport and communication is warehousing.
Liquid capital in a business means the
Answer: D (assets easily convertible to cash.)
Liquid capital is cash and assets easily turned into cash.
The "relationship which subsists between two or more persons carrying on a business with a view to profit" is
Answer: B (partnership.)
This is the legal definition of a partnership.
'Rights issue' is the
Answer: D (shares offered to existing shareholders at a cheaper price.)
A rights issue offers new shares to existing shareholders below the market price.
In limited partnership the partners'
Answer: B (liability is limited.)
Limited partners' liability is limited to the capital they put in.
Which of the following pieces of information would be found in a typical debit note?
Answer: C (Brief reason for the debit)
A debit note states why the buyer's account is being increased, e.g. an undercharge.
The completion of the production process by grading and branding of goods is a function of the
Answer: B (wholesaler.)
Wholesalers grade, blend, pack and brand goods before passing them to retailers.
A false statement made by one party with an intention of inducing the other party to enter into a contract with him is known as
Answer: A (misrepresentation.)
A false statement that leads someone into a contract is misrepresentation.
The essence of adopting the marketing concept by a firm is the recognition that goods and services have no value unless they are
Answer: A (desirable to customers.)
The marketing concept holds that products are valuable only if customers want them.
When consumers engage in actions that express dissatisfaction with the quantity, price and quality of goods available, such action is termed
Answer: B (Consumerism.)
Consumerism is organised action by consumers to protect their interests.
Commerce 2 (essay)
(a) Explain industrial occupation. Give three examples.
(b) State three uses of capital as a factor of production.
(c) State four uses of land as a factor of production.
(a) Industrial occupation is the physical production of goods: extracting raw materials or changing them into finished or semi-finished goods and structures. Examples: extractive (mining, farming, fishing), manufacturing (textiles, car assembly), construction (building, road making).
(b) Any three: to start the business; to buy machines, buildings and equipment; to buy raw materials; to pay wages and running expenses (working capital); as security for credit; to expand the business.
(c) Any four: for farming; for building factories, offices and houses; for mining and quarrying; for roads, railways and airports; for forestry; for sinking wells/boreholes; for grazing livestock.
Give real examples for each class in (a).
Commerce 2 (essay)
(a) State five features of a partnership business.
(b) Explain five reasons why governments participate in business.
(a) Any five: 2 to 20 members (banking partnership up to 10); formed by agreement/deed; capital from partners; unlimited liability (except limited partners); profits shared as agreed or equally; each partner can bind the firm; not a separate legal entity; ends on death, bankruptcy or insanity of a partner; shares not transferable without consent.
(b) Any five, explained: to provide essential services at affordable prices; to provide large capital needed for some industries; to provide infrastructure; to ensure even development; to prevent exploitation by private monopolies; to control strategic industries/national security; to create jobs; to earn revenue.
In (b) explain each reason in a sentence.
Commerce 2 (essay)
(a) State any four advantages of a public limited company.
(b) Explain the following:
(i) Ordinary shares;
(ii) Cumulative preference shares;
(iii) Debenture.
(a) Any four: can raise large capital from the public; limited liability; continuity (separate legal entity); shares easily transferable on the stock exchange; can employ specialists; economies of large-scale operation; investors protected by regulation; employees can become shareholders.
(b)(i) Ordinary shares (equities) – shares owned by the real owners of the company; holders vote, bear the greatest risk and receive variable dividends after preference shareholders.
(ii) Cumulative preference shares – earn a fixed dividend before ordinary shares; if the dividend is not paid in a bad year, the arrears are carried forward and paid later.
(iii) Debenture – a long-term loan to a company, usually secured on its assets, earning fixed interest whether or not profit is made; holders are creditors, not owners.
Show the difference between owners (shares) and creditors (debentures).
Commerce 2 (essay)
(a) List four means of payment in business.
(b) Explain the following:
(i) Quotation;
(ii) Hire purchase;
(iii) Deferred payment;
(iv) Quantity discount.
(a) Any four: cash; cheques; bank drafts; postal orders/money orders; bills of exchange; credit transfer; credit/debit cards; standing orders; electronic transfer/POS; vouchers.
(b)(i) Quotation – a seller's reply to an enquiry, stating prices, terms of payment and delivery of goods.
(ii) Hire purchase – the buyer pays a deposit, takes the goods and pays the rest in instalments; ownership passes after the last instalment.
(iii) Deferred payment – the buyer takes the goods now and pays the whole amount or instalments at a later date; ownership usually passes at once (credit sale).
(iv) Quantity discount – a reduction in price given to buyers who buy in large quantities.
Keep each explanation to one or two sentences.
Commerce 2 (essay)
(a) State two advantages of courier services.
(b) List and explain six communication services rendered by the post office.
(a) Any two: fast delivery; door-to-door collection and delivery; items can be tracked; safe for valuable documents and parcels; proof of delivery.
(b) Any six, explained: ordinary letter post; registered post (for valuables, with compensation); express/speed post; parcel post; post office boxes and private bags; poste restante (mail kept for travellers to collect); recorded delivery; business reply service; franking machines; postal and money orders; EMS courier.
Each service in (b) needs a one-line explanation.
Commerce 2 (essay)
Explain the following:
(a) Insurance Underwriter;
(b) Promoters;
(c) Auctioneer;
(d) Factor;
(e) Broker.
(a) Insurance underwriter – a person or company that accepts insurance risks in return for a premium, and signs the policy.
(b) Promoters – people who take the steps to form a new company (draft documents, register it, raise capital).
(c) Auctioneer – an agent who sells goods publicly to the highest bidder for a commission.
(d) Factor – an agent given possession of goods to sell in his own name, who may give credit and fix prices; earns a commission (factorage).
(e) Broker – an agent who brings buyers and sellers together without holding the goods, earning brokerage.
Define each person by what he does.
Commerce 2 (essay)
(a) Outline six functions of advertising.
(b) Explain seven factors to be considered in choosing an advertising medium.
(a) Any six: informs consumers about products; persuades people to buy; introduces new products; increases sales; meets competition; builds brand image/loyalty; educates on uses; reminds consumers; supports mass production.
(b) Any seven, explained: cost of the medium; coverage/area reached; type of audience (age, income, literacy); nature of the product; frequency of exposure; medium used by competitors; flexibility/time available; availability of the medium; purpose of the advert; need for demonstration (TV) or permanence (print).
Explain each factor in a sentence.
Commerce 2 (essay)
(a) State four differences between a loan and an overdraft.
(b) Explain six factors to be considered by a Bank Manager before granting a loan.
(a) Any four: a loan is a fixed sum credited to a separate loan account, an overdraft lets a current account go into debit; a loan is open to customers with any account, an overdraft only to current account holders; interest on a loan is on the whole sum, on an overdraft only on the amount used; loans are usually longer-term, overdrafts short-term; loans are repaid in fixed instalments, overdrafts fluctuate; loans usually need collateral, overdrafts may not.
(b) Any six, explained: character/integrity of the borrower; capacity to repay (income, cash flow); collateral/security offered; purpose of the loan; amount and duration; past record with the bank; capital the borrower has in the business; government/central bank credit policy; economic conditions; guarantors.
The '5 Cs' (character, capacity, capital, collateral, conditions) cover most of (b).
Commerce 2 (essay)
(a) Give five reasons for the protection of consumers.
(b) State five measures taken to protect consumers.
(a) Any five: to prevent sale of fake/adulterated goods; to stop exploitative prices and hoarding; to stop false or misleading adverts; to ensure correct weights and measures; to protect health and safety; to protect against harmful/expired drugs and foods; to ensure fair terms in credit/hire purchase; ignorance of consumers about their rights.
(b) Any five: laws such as the Sale of Goods Act, Hire Purchase Act, Food and Drugs Act, Weights and Measures Act, Trade Descriptions Act; agencies such as the standards organisation, NAFDAC and Consumer Protection Council; consumer associations; price control boards; consumer education; self-regulation by trade associations; courts.
In (b) name actual laws or bodies.
Commerce 2 (essay)
Deslie Cobola, a businessman has the following assets and liabilities as at 01/01/07 (Le):
Stock – 120,000
Fixtures – 335,000
Debtors – 111,000
Overdraft – 27,000
Machinery – 348,000
Motor vehicles – 232,000
Cash – 82,000
Creditors – 101,000
From the above information calculate the following:
(a) Total fixed assets;
(b) Total current assets;
(c) Total current liabilities;
(d) The working capital;
(e) The capital employed.
(a) Fixed assets = fixtures 335,000 + machinery 348,000 + motor vehicles 232,000 = Le 915,000.
(b) Current assets = stock 120,000 + debtors 111,000 + cash 82,000 = Le 313,000.
(c) Current liabilities = overdraft 27,000 + creditors 101,000 = Le 128,000.
(d) Working capital = 313,000 − 128,000 = Le 185,000.
(e) Capital employed = fixed assets + working capital = 915,000 + 185,000 = Le 1,100,000 (equal to total assets 1,228,000 − current liabilities 128,000).
Bank overdraft is a current liability.